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tv   Closing Bell  CNBC  March 18, 2014 3:00pm-5:01pm EDT

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it's extremely difficult, it's extremely expensive. i can't sell this bikini for $79.99 and make it in the united states. vild i would have to sell it for $150. >> we have to leave it there, unfortunately. those who want to learn more can check it out on the website. thank you so much to frank. >> watch "shark tank" 8:00 p.m. thanks for watching "street signs," everybody. >> "the closing bell" is next. >> see you later. and welcome to "the closing bell." i'm kelly evans here at the new york stock exchange where for the second straight day we're seeing a pretty strong rally in stocks, bill, as the federal reserve begins a policy meeting. >> and if you were blaming vladimir putin for last week's declin declines, investors may have to thank him for two-day rally. market taking putin at his word that it all stops with crimea. others have their doubts though as they say, that's what makes a market right now. so we are higher so far today
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gaining back what we lost last week. >> for everyone who points to the geopolitical concern moving to the back burner, there will be someone who says you never want to take a guy like vladimir putin at his word. also, the market keeping an eye on the fed. at this hour tomorrow janet yellen will be in the midst of her first news conference. right now we're in day one of na two-day meeting. we'll lay out what investors should expect. then remember earnings? that matters -- >> i think i heard of it. >> -- as well today. we have two big ones coming tonight. two tech titans will be reporting at the top of the hour, oracle and adobe. of course, we will have the numbers, the market response, and the complete analysis coming up right here. and so on this tuesday, the dow jones industrial average up 108 points to 16,355. take a look at the nasdaq which is rallying nicely as well, up about 70 points. i'm sorry, it's up about 52 points.
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the s&p 500 finally adding 14 this hour. 1873 is the level there, and believe it or not, bill, i believe 1878 is the closing high. we are five points away. >> that close. joining us on the "the closing bell" exchange, kimberly foss, peter anderson is back with us, kyle harrington, mark martiac from premiere wealth first allied and our own rick santelli joins us as well. mark, are you concerned about ukraine, the situation with russia? is it enough to make you want to rethink your growth portfolio right now? >> it is on both counts, bill and kelly. thanks for having me on your show, by the way. it is in the sense we haven't seen the full effect of what sanctions are going to unfold from washington, and, in fact, with respect to ukraine and europe, one of their trading partners, europe imports 30% of its natural gas from the
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ukraine -- from russia. >> through the ukraine. >> we could have an issue if russia decides to cut off the supply to the ukraine of natural gas. but i do think that investors and the markets have the drama now priced into them, and i don't fear for investors as much at this point. >> kyle, i wonder if this isn't one where consumers wind up taking it on the chin. some of the soft, some of the grains in particular, is it too much to attribute that to what's happening in terms of this unrest and to say that perhaps it won't be for months from now until the effect of that is really felt? >> well, you know, i still think that the effects are here to stay and are going to be felt in the coming months. i think that the volume tilts and the increased international disarray will drive volatility up and down and in the domestic marketplace. if you're not allocated to some
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marketplaces outside of the united states, for example in indonesia, that over the last six or seven years has grown at 5.8% gdp, you're making a mistake. visit your portfolio with an international allocation. >> would you buy russia? >> no. i think i'm going to sit back on russia for a while. i want to see how this unfolds. i'm very cautious in that marketplace, and vladimir putin, he makes me nervous. >> peter, we're only five points away from an all-time high on the s&p, but you've done the math. you went way back. you still think this is a cheap market here. >> well, i have done the math, that's right, bill, and if you look back, what i like to do is be sell telescopic. let's look from a macroperspective and then we can deal down to the specifics a the a stock level. when do you that, everything seems to be pointing in the right direction. the lights are all green. on the macro perspective, if you
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look back 65 years on the s&p 500 and you look to see where the valuations are, right now at around 17 or 18 times, we are not, and i think this is going to surprise a lot of viewers, we are not really overvalued when -- >> is that if you include episodes where we saw the market trading significantly overvalued? in other words, does the average look okay because we've had times like the dotcom bubble? >> kelly, it includes everything. that's why i wanted to go back that far. some people will only go back ten years saying it's a new economy, et cetera, but 65 years i think we'd all agree is a pretty long time to look at all these stats. and so it includes everything from 65 years. if you do this it turns out to be within less than one standard deviation of that bell curve distribution that you normally see, and i computed that on a pe basis you have to be about 20% higher before i would start whispering that word bubble.
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so i think we have a way to go. now, that's the macro perspective. if you want, we can talk about the individual stock perspective, too, and it all points to very -- >> do you want to throw out a name or two you think is attractive here then? >> sure. veri phone, pay. it's up 34% year-to-date and that's not including the increase today of verifone. it's a company that has beat and set its earnings to be greater. and you own verifone? >> yes. >> and you're tired of hearing what? >> i'm tired of hearing all these companies that have missed and guided down. kelly, for every five of those i would say there's at least one type of stock like a verifone where things look optimistic. >> we have a positive bias as
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you're pointing out. do you feel like we're destined to go higher as well or would you take something off the table right now as we approach all-time highs? >> well, we're balancing as we speak today, but i really do think we are poised to go higher. we have crimea going as planned. we have yellen speaking today. the last two times she's spoken, the market has gone higher, and don't forget, guys, we have $2.678 trillion in money sitting at.001% on the sidelines. no real increase in interest rates except for maybe 2015. so despite all the fundamentals, we sill have some room in this market to go. it is going to be spotted with volatility, but i still think we've got room to grow in this market. >> rick santelli, it's not uncommon to see the market rally into the fed's meeting tomorrow. but we could be talking about significant tweaks to the
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language, their tashrgets, anotr taper on the way. >> you know, tweaks to the language, does that really sound as earth shattering as we want to make it out to be? i don't know. >> i think it could be. >> to me it's all the rorschach. in the end we all know what's going on here. we have janet yellen continuing quote, unquote, the taper. why they need to continue to make any purchase whatsoever after listening to our guest makes no sense to me at all. i think the salient feature tomorrow is why they don't want to pay attention to the unemployment rate tomorrow after all these years of telling us what wonderful news it was that it would move lower. it affected the political landscape, but after tomorrow it's probably not going to be as important. they'll switch gears to things like inflation, which the government measures, but yet anybody who has a hunger for three needles a day doesn't really jive with that anyway. >> they measure both of them. if you're saying we can't trust cpi, then we shouldn't trust any of the government data. >> wow, so we do agree on
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something, don't we? >> what do you think the market would do tomorrow if janet yellen said, okay, i'm done with tapering. no more asset purchases? >> well, gee, let me see, there might be some market volatility. oh, my god. >> really? >> it's not preannounced and everybody isn't in on the fix. i think it would be a wonderful thing for fre markets. a great stride forward. >> kyle harrington, i think you would agree. >> i think i agree 100%. the less janet yellen a involved in the free markets the process will expand and i think it will be much healthier long term for the united states economy. i would agree 100%. >> one of the things i think is pretty important to look at here is nobody has mentioned this, but this is janet yellen's first official press conference. i know we have seen her in the past, and i'm really curious to see what her communication style is going to be. i don't know if everybody on this panel has actually watched her on camera. >> rick has watched her very
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carefully. >> okay. well, it is rather interesting the way she has answered some of these questions, so i'm going to be looking to see regardless of whether or not she's going to be tapering, i know that's very important, but also i think the way in which she communicates this stuff can really send the market upside down, and she has to be extremely careful to continue -- >> what do you mean? are you worried from the way in which she handled the testimony? >> well, i just tuned in on some excerp excerpts, and i wanted to ask a couple more questions. of course, i wasn't there, but i think there was some things that could have been answered a little more clearly and i don't know if that's because of her academic background and she tends to think more words than we normally do. >> if you had one question for her tomorrow then, what would it be? >> i think it would be are you going to continue to give forward guidance the way your
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predecessor has and are you aware what kind of volatility that might cause in our markets. >> those are good questions. i would ask chairwoman yellen when she expects to lower the short-term rate. if, in fact, 2015 is still in the future to start lowering the short-term fed funds rate. >> you mean to raise. >> to raise it rather, to raise it, yes. to raise it, yes. >> that would be an interesting 2015. >> to raise it, yes. >> we've got to go. just remind everybody, janet yellen's news conference will be live here on cnbc tomorrow so you can see that starting i think around 2:30 eastern time. >> correct. thanks, guys. have a good one. >> heading toward the close. pretty good gains today. the dow is up 102 points. here we go again on top of yesterday's rally, so we're gaining back what we lost last week so far. 50 minutes left in the trading day. today's rally sparked in part by russian president vladimir putin saying he will not seize other parts of ukraine. coming up, we'll discuss why the market is putting so much faith in putin's promise.
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>> the market seems to believe putin. do you? tweet us. we'll reveal your best responses coming up. the handle would be -- >> @cnbcclosingbell. >> disney is the second best performing dow stock in 2014 helped by the success of "frozen." can disney continue to deliver magic for shareholders? announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade.
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. welcome back. so stocks are building on yesterday's big gains and that includes disney. in fact, the blue chip has been the second best dow performer this year. >> you would think investors are happy. morgan brennan has been monitoring the annual shareholders meeting. are they happy? >> i think so. the meeting just ended. 10 of the 11 board members were re-elected including sheryl sandberg. blackberry ceo john chen and quar and twitter could founder jack dorsey. probably the most interesting piece of news relating to
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today's meeting actually came before the meeting. there had been a proposal for the largest shareholders to be able to nominate candidates for the board. that was actually taken off the table today after disney tweaked its language regarding the chairman position in its proxy statement. that language basically reaffirming that the chairman be an independent director unless it's in shareholders' interests to do otherwise. a new cars sequel is coming and a new "incredibles" film and the next "star wars" movie will take place 30 years after "return of the jedi." kelly, back to you. >> morgan, thanks very much. let's stick with disney for a moment. it's been on quite a run, up 44% other the past 12 months. >> let's talk about it.
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timot thinks there's more room run and abigail says the stock has gotten well ahead of itself. let's brawl it out. tim, why do you think there's more time to the upside? >> i'm the fundamental story for disney is very, very good. three factors i particularly like are think really, really strong run of films likely to come out not only this year but you mentioned "star wars," we have some "avengers" film next year. they have higher volumes and higher pricing in the parks. and we have the shanghai park opening coming in december of next year. and then finally i'm really interested by some of the streaming tv deals disney has done. you may recall a year or so ago they did a deal with netflix to do first run rights on their films, and just recently we had the deal with dish last week probably similar to the comcast deal they did a couple years ago where they're selling some tv everywhere streaming rights and
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that's incremental revenue for the disney tv properties. >> abigail, you look at the stock and you don't like the chart here or -- >> when i look at the chart it really does look like it's setting up for a near term pull back. when i say the stock is overdone, ahead of itself, it's up 100% over the last two years. the dow is up only 25% in that time. some investors say that outperformance is justified because of the strong story, because of the prospects. when i look at revenue growth, we're looking at just high single digit revenue growth. it seems disproportionate for me. it seems hard to believe this stock is where it should be. it appears overbought. investor sentiment is wildly bullish at this point. back to the charts, they really are pointing to a near-term pull back. we could actually be looking at just a move back on the markets moving down over the next couple weeks. >> tim, what is the stock trading at in terms of valuation here compared to the historical average? >> right. on a pe it's about 20 times.
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that certainly puts it at a very upper end of its direct peer group. a number of its direct peers are trading in more kind of the 17 to 19 level. so it's at the upper end of that. actually seeing any stock have this kind of a strong performance i wouldn't be surprised at all if there's some sort of a period of taking profits here. but i think the revenue environment is very strong and also the earnings environment. talking about the investments in the parks, you know, that should translate into some nice operating leverage here. they also have a product called my magic plus which should improve efficiencies at the marmar parks. we're modeling about midteens eps growth over the next couple years and i don't think we're fuelly allocating the right estimates in for the park expansion in shanghai or "star wars" or avengers. >> you sound like you wouldn't be surprise fd there was a pull back of some kind at disney. >> i'm not saying it is cheap. it's trading at 20 times. it's the upper end of the peer
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group and it's up 40% or so in the last year. you know, any stock that has that kind of strong performance -- and i don't necessarily see a fiscal q2 catalyst for disney necessarily. i wouldn't be surprised if there's a little period of taking profits, but my view is not short-term. my view is one year and beyond and i think there's a lot to like about disney. >> if it pulled back to what level would you buy it? >> there does appear to be some support around $70 but i wouldn't be surprised to see it go back to $40. that is extreme even in my view but it looks like there could be a negative surprise. let's not forget about this malaysian airline mystery. god forbid if it's related to terrorism. that would be a negative for this company, no doubt. you know, i don't know what the chart is pointing to exactly but it's pointing to something negative. >> you mean because of the hit to travel. >> to travel and consumer spending, confidence. >> but there's no direct -- >> no direct link, but this terms of the theme parks -- >> tourism overall.
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>> tourism and people spending on movies and that sort of thing. it could potentially hurt disney. >> thank you both. we're heading into the close with 40 minutes to go. the dow is still up 102 points here, bill. we'll keep a close eye on the s&p as well. >> hanging onto the gains here. russian president putin isn't the most trustworthy person in the world, so why did this market rally like this on his pledge this morning to not seize any more parts of ukraine? we're going to discuss that coming up here. also, biotech stocks, they've been red hot for the most part lately, but closely follow value investor joel greenbott thinks you should be feeling sick about buying this group. find out what stocks he's betting against. that's coming up later on "the closing bell."
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was it truly something he said? stock future this is morning before the open rallied right after russian president vladimir putin's speech justifying his nation annexing ukraine's crimean region and this rally has continue. >> cnbc chief international correspondent michelle caruso-cabrera is joining us today to explain why the reaction has been so strong. >> vladimir putin's annexation of crimea was a pomp filled
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announcement in front of the russian parliament. flag bearing honor guard and entrance heralded with trumpets. an hour-long speech and signing ceremony with putin and three crimean politicians all backed by the kremlin. with that crimea was under the control of russia. take a look at the s&p 500 futures from that hour. just before 8:00 a.m. east coast time, they rose sharply. it was at that moment when putin during his speech said, don't believe those who say we want more than crimea. we don't need it. that was the answer the markets were looking for. take a look at the russian stock market, which had been in negative territory but turned decidedly positive about the same time almost 4:00 p.m. in moscow. as you can see here when it happened from this intraday chart. whether putin can be believed remains to be seen. remember, two weeks ago, here is the video, he told reporters at a news conference did he not plan to annex crimea, and yet he
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did so today. on one other note mikhail gorbachev said the referendum was a happy outcome. many americans remember his meeting with president reagan and when the president said mr. gorbachev tear down this wall. and putin spoke to the germans and said we supported your reunification, we hope you do the same here. he sees crimea reuniting with russias a analogous to that situation. >> michelle stay there. let's talk about this. bring in "fast money" contributor tim seymour and cnbc's jeff cox to talk about if investors should be buying into what putin is selling. i think both you guys are pretty skeptical on this. jeff, i know you are. >> yeah. i don't think there's any reason to believe what putin says. i think it was a one-day trade. if you look at what the russian stock market did, as michelle pointed out, it was basically
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the equivalent of over 500 dow points. i think anybody who believes that there's anything permanent here is crazy. i mean, this is just a one day thing. we know -- if anything, it makes the region less settled because we know now that putin can do what he wants and there's going to be very few recriminations behind it. >> and, tim, that being the case, what are investors to do? >> well, i don't know if it's a one-day event as jeff points out. i think you really -- what putin has won and jeff has said this, he's got crimea, and guess what? we're not even talking about crimea now. we're talking about eastern ukraine. here we suddenly have had a guy who basically now is controlling the black sea, isn't worried about nato coming to his back door and this is what he wanted. he already controlled crimea so clearly it tells you where the interest lie here. they're in eurasia, not with the g-8. from a markets perspective, i would be very careful at least of expecting this to go into the end of the week. something like spare bank, which i think is one of the great
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banks in emerging markets, and it's the state bank of russia, that bank has rallied 24% off the lows that we saw thursday afternoon. i was advocating buy -- >> you're saying it's over, tim. is that what you mean? >> you're in a place where you need to be tactical. i think there are companies you can own and you can own them at these levels and ride through volatility. i think there are names you can trade. >> michelle, i just want to raise this point, this executive order that obama has issued against russia, against certain individuals associated with the russian government, seems extremely broad and could potentially net u.s. companies, and i wonder even u.s. investors if that were to be the case. i'm not saying they're trying to go after them. but it basically allows the white house to sanction any individual or company providing financial support to the russian government. well, that's pretty broad. >> it is but then they were very specific about the individuals and then in the briefing call with reporters, senior administration officials said
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that they were very specific that they were not going to be sanctioning businesses at this point. what we're really waiting to hear, kelly, is what's the next step step? they made it sound yesterday like if he annexed crimea, there was going to be a lot more to come, but so far silence. >> and europe is not interested at all in cutting off russian gas. germany gets 30% of their gas from russia. this is a big deal and they've been very cquiet. big talk, big bluster, but right now it's putin 1, u.s., 0. >> it's a giant finger wag at putin. i think it speaks to a larger point in the market we have to be looking out for. this is a market that's really priced for perfection. it's assuming perfection. it is assuming the best possible outcomes of all of the things that are coming down the pike as far as the market goes whether it's the chinese economy or whether it's putin or whether it's the federal reserve. i mean, investors are really -- >> is it telling us though to
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some extent the u.s. economy is strong enough to weather some of these -- >> yeah. >> -- difficulties? >> yeah. and i think from a trade perspective, i think think people are overdoing the russia impact. russia is turning eastward. russia and china are now a much bigger ally than they were two weeks ago. from a markets perspective we have to keep this in context. volatility -- sell germany, don't sell the u.s. on this news. >> i don't know -- i think the jury is still out where the u.s. economy is. and the other thing that the market is priced in for perfection is that the slowdown in january and february was solely due to the weather. we don't know whether that's the case. we have a lot of question marks out and we don't know what's going to happen through the year as the fed continues to take its foot off the gas pedal. >> michelle, i embrace your question about what happens next? putin has spent years ingratiating himself to the economic leaders of the world and being a part of the g-8 process which was so different from the past. now all after sudden we get this
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different putin. it's like the throwback days. so you wonder what their role will be in the g-8 and if, in fact, they even care what the role will be down the road. >> i think the g-8 -- i have thought for a long time it's a fairly meaningless organization that doesn't get a lot done. when it comes to what does putin do next, i think that's what we wait for. what he says today is not relevant because i think he's playing a dynamic game. he doesn't have a plan. he says, okay, i'm going to do this, but see how the west reacts. what do you get so far? zero. that may incentivize him to do more. we don't know. >> and we'll have to leave it for right now. thanks very much for your perspective. appreciate it. stick around and catch tim and the rest of the "fast money" crew coming up at 5:00 p.m. in 90 minutes' time. market clearly buying into putin's promise but are you? we're asking your thoughts on what we just talked about here. send us your tweets to @cnbcclosingbell. i got it right. we'll reveal the best of your
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tweets coming up here on "the closing bell." >> we have 30 minutes to go before the close, and despite some of these concerns, the dow is adding 88 points. the s&p 500 is less than 10 points away from a new all-time high. this on day one, bill, of the fed's two-day policy meeting. >> then janet yellen will hold her first press conference as fed chair tomorrow. what do investors want to hear from her to keep this rally going? we'll have a preview of that news conference coming up next. also, how is gm's ceo mary barra handling the recall controversy. it's. li been linked to a dozen deaths. you don't want to miss what kevin o'leary and marcus lemonis have to see. plus some new developments out of gm. stay tuned for all of that. you can catch more of kevin o'leary on tonight's "shark tank" marathon at 8:00 p.m. eastern and catch marcus lemonis on a new episode of "the profit" at 10:00 p.m. eastern time on
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cnbc. stay tuned. stay tuned. announcer: where can an investor be a name and not a number? scottrade. ron: i'm never alone with scottrade. i can always call or stop by my local office. they're nearby and ready to help. so when i have questions, i can talk to someone who knows exactly how i trade. because i don't trade like everybody. i trade like me. that's why i'm with scottrade. announcer: ranked highest in investor satisfaction with self-directed services by j.d. power and associates. no two people have the same financial goals. pnc investments works with you to understand yours and helps plan for your retirement. talk to a pnc investments financial advisor today. ♪
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welcome back. here is a look at what's happening in markets. the stocks are surging for a second straight day. the dow creeping closer to erasing all of last weeks' losses. >> dominic chu, what's driving
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this rally today? >> let's start off with microsoft. they may unveil an office of their office software suite for the ipad. that's according to reuters and other media reports. shares are up almost 4%. shares of fossil also popping on the day. the company saying it's working with google to make android technology wearables like watches, glasses possibly for the future. those shares on the upside as well. take a look at penn virginia. nothing like a little shareholder activism moving higher. george soros disclosed a 9% stake and that's always a big deal, and lastly, it was a day in the red for video game restaler gamestop. walmart introduces a new program to allow shoppers to trade in games for store credit at walmart. when the biggest retailer in the
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world wants a piece of your action, your shares will take a hit. >> as we know, the fed kicked off its two-day meet today, but investors are focusing on tomorrow when we get the committee's statement and we get that news conference by janet yellen. >> not only that, but fed chair janet yellen, that will be her first news conference she's delivering and you will see it right here on "the closing bell." what should we be expecting? joining us is jared bernstein and mya mcgiddes. great to see you both. mya, what do you expect here? >> well, i'm anticipating that what we're going to hear from the new chairwoman is a sense of where they're going to go with forward guidance and the sense of where we think the economy is headed. it will be very important what their projections for the economy are and how that is going to dove tail with if they're going to be changes in the level of specificity that the fed leaders put out in terms of forward guidance. as we know it's pretty likely
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they will be less specific but that will give a little less insight into the future policies of the fed. >> jared, our rick santelli has a dream she'll come out tomorrow and say, okay, no more tapering, we're done, no more buying of assets. qe is all done. we're not expecting anything like that, of course, but do you expect any difference, any subtle difference from ben bernanke to janet yellen? >> first of all, let me say rick santelli's dreams are probably my nightmares. let's get that straight. no, i mean, i think she's going to come out and take another ten off the monthly asset buys. we're talking about a mere $55 billion a month now in quantitative easing and as maya suggested, perhaps a shift from less quantitative to more qualitative forward guidance. we'll see about that. but i think the important point and here i disagree with rick, i think what we'll hear from chairwoman yellen is that the
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economy still needs some help from monetary stimulus. it is not out of the woods. output gaps remain strong. inflationary precious remain very que he is sent. i think -- that by the way has been the message of previous meetings, so i expect consistency in that regard. >> maya, the one concern we tend to hear from people when they think about a stronger u.s. economy, what happens when rates go up and we have to do something to address the longer term entitlement issues and the u.s. government perhaps is paying a little more in interest? what's your main concern about the evolution here over the next couple years of the u.s. economy? >> right. well, i think we are in a position where we have become incredibly vulnerable to any significant uptick in rates. i don't think that's on the immediate horizon, but it could be, and we're not hedged against it at all. so if rates go up, just by one percentage point for instance, it will lead to about $1.5 trillion more over a decade in interest payments.
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interest already the fastest growing part of the budget, even faster than health care costs and social security. it's left us vulnerable and the fed under chairman bernanke and my guess is under chairman yellen it will as well has sort of danced up to pushing policymakers to think about how to get the long-term debt under control. the fact we're so polarized in washington right now and we've been unable to take real measures we need to mean a lot of the heavy lifting has fallen on the fed instead of this being a partnership between fiscal policy and monetary policy which is ideally what you would want. >> maya, you said you wanted more clear forward guidance. i know everybody would love that, but admittedly, they're making this stuff up as they go along and it's so data depep dent they're not even sure what the data is going to say down the road. how much clearer do you want this forward guidance to be? >> let me clarify. i think they're going to talk tomorrow about forward guidance. i actually am somewhat concerned about the notion of forward guidance as one of the main fed tools because what it does is it
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precommits sort of policies down the road. >> exactly. >> and loy ta lot of things can change then. it's similar to what we do in fiscal policy. it may help you now, but it can lead you into tough situations later. i don't think it's the strongest tool we should be relying on. i'm curious to see what comes out of the press conference tomorrow on the topic. >> jared, just real quick because we have to go, but there are going to be plenty of people now and in the months perhaps to come who say that, you know, the talk about higher rates and what that will do to the budget has been a lot of crying wolf. that said, this point will come upon us. so to the trillion and a half dollars maya just referenced, what are responsible policymakers here to do? >> there's no question that interest rates at some point are going to crawl off the bottom and that's going to mean higher interest payments. remember, half of what we pay in interest is to ourselves, so i think that that's okay. i think the important thing to recognize is that the best way to reduce the debt to gdp ratio is to grow faster, and that would suggest if anything we don't want fiscal constraint.
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we don't want austerity. we need to promote growth in the near term. that will help us on the problem that maya identified. >> jared and maya, thank you both this hour. we have about 24 hours to go until that event tomorrow. in the meantime, adobe out with earnings much earlier than expected. it was supposed to be after the bell, jon fortt. what happened? >> that appears to be the case. these are numbers from a data sheet that appears to have posted to the site early. revenues are coming in at $1 billion. earnings per share nongap at 30 cents versus 25 cents expected. and creative clouds subscriptions according to this data sheet in at 1.84 million subscribers. that is a jump of around 400,000 over last quarter. that pretty much equals the strongest jump that adobe had seen to date in creative cloud subscriptions. adobe is transitioning from a
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more traditional software model to a subscription cloud model. that can put a damper on revenue but it's really good for evening out revenue growth, potential, and stability in the longer term and they seem to have beat on the top line and had a strong quarter for creative cloud subscriptions which is goiod across the board. have to listen to see what the projection is for the coming quarter but they appear to be on pace to hit that 3 million subscribers that the ceo expressed last quarter. >> and the stock has been trading rapidly and higher, up a percent as a result. thanks, jon. heading toward the close with about 15 minutes left and the dow starting to lose some altitude. we're up 82 points. we were up well above the 100-point mark a while ago. >> we've heard from adobe. oracle is next. they're getting set to report earnings after the bell. and a person in the cockpit reportedly rerouted the malaysia air flight 370 from its intended
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all right. the fun continues. investors getting set for a big technology earnings report coming up after the bell tonight. >> josh lipton has a preview of what we might expect from oracle. josh? >> kelly, oracle reporting after the bell. the street is going to be looking for eps of 70 cents on revenue of $9.4 billion. that would represent growth of about 8% and 4% for the company. by the division there will be a lot of focus on new software licenses which tells us how much new money the company is bringing in. analysts expect sales of $2.5 billion for the quarter. oracle stock has not done much over the past year, and one reason is concern about competition from rivals such as sales force and work day which are attacking oracle from the cloud. investors will want to see big growth in bookings for its cloud-based products.
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kelly, back to you. >> all right, josh. thanks very much. we should only have a couple minutes to go on that one hitting right after the bell, bill. in the meantime, we have 13 minutes before that close. the dow up about -- i can't read the numbers. >> up 81 points right now. we're fading into the close. >> thank you very much. >> if you call that a fade there. despite the market rally over the past five years, you may be surprised by just how little americans have saved up for retirement or how ready they think they will be when that retirement day comes. that alarming story still to come here on "the closing bell." stay tuned. stay tuned.
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welcome back. the dow up 82 points now as we head towards the close with nine minutes left. jeff from fifth third bank and walter todd from greenwood capital are with me today here. do you like this rally? which market do we believe, last
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week's five-day sell-off or this week's two-day rally here? >> somewhere in between. not very helpful, but we think the days are getting a little tougher where we can expect to see continued strength in the market. >> the days are getting -- >> it's getting a little tougher to expect continued strength in the market. >> so you think we're getting a little toppy here, is that it? >> we've cut back on our equity allocations in our portfolios. we're playing with real money. we think it's increasingly risky in the equity market short term. we're still zwregenerally overweight. >> we have some breaking news. becky quick on apple. what do you have for us? >> there is a new book on apple that's out today. it's called haunted empire by a former "wall street journal" reporter who was on "squawk on the street" earlier today. the book has stirred up some controversy. a lot of books that look at apple do. it comes to the conclusion that apple's best days are behind it.
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so for that reason you are seeing a lot of people both inside and outside apple talking about this today and kind of digging things through. if you wonder what people inside apple are thinking about it, i did just go back and forth over e-mail with tim cook the ceo of apple to get his thoughts. here is what he has to say in an exclusive statement he's given to cnbc. tim cook says this nonsense belongs with some of the other books i have read about apple. it fails to capture apple, steve, or anyone else in the company. apple has over 85,000 employees that come to work each day to do their best work to create the world's best products, to put their mark on the universe and leave it better than they have found it. this has been the heart of apple from day one and it will remain at the heart for daek kouds to come. i am very confident about the future. we've always had doubters in our history. they only make us stronger. this again despite a former "wall street journal" reporter who did some exhaustive
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research. it has stirred up some controversy because it comes to the conclusion that apple's best days are behind it, that it's gotten tougher at apple to innovate since steve jobs' death. tim cook reporting there are 85,000 people who are coming to work every day and showing up. >> we're running out of time here, but does he simply just dispute the conclusion that apple's best days are behind it or can he point to specific things? i don't know if you got into that -- >> i don't have any specifics on it, bill, and i was not on the phone with him so it wasn't a back and forth he can change. this is a response he sent back. i talked to other people who say some of this is cherry picking but the controversy you tend to get when you take a deep dive into a company. people on the inside, people on the outside so tee things differently. >> and the word nonsense speaks volumes right there from tim cook to describe the book. i guess we know his thinking on that.
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>> that's right. >> thanks, becky. >> thanks, bill. >> becky quick. we're going to take a quick break. we'll get to the closing countdown and see how the market handles the close and then after the bell, go bargain hunting with joel greenblatt. we'll find out where he sees opportunities in this market. you may be surprised by some of the names he has on his list right now. you're watching cnbc, first in business worldwide. friday night, buddy.
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coming up on the two machine minute mark. a recap of the day, the putin rally continued this morning. we were up more than 100 points much of this day. starting to lose altitude in the last hour of trade. 86 points on the dow. adobe came out and beat expectations. it's up about a percent right now. oracle is what's coming out. they are expecting a profit of 70 cents. says it could come out to 74 cents. back with jeff from fifth third and walter todd from greenwood capital. you have already established you're taking some money off the table. what about you? >> we acknowledge the market could be range bound in the short term but we think we're in the middle innings of this economic expansion. we think consumers, businesses, and government have underinvested. we think we're going to see a capital spending push here this year that's going to drive economic growth and that leads you to industrials, technology, financials, and discretionary.
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>> you're investing in them right now. >> correct. pick your spots, the market may be choppy but we like the economic expansion. >> you like the economy longer term you just think it's getting ahead of itself. >> we think the next top is going to shift very quickly to the fed being behind the inflation curve. we look at tighter labor than we think, tighter capacity in the economy. last year's housing rally filtering into this year's cpi numbers. all that could change the tone of this market very, very quickly. >> and bob pisani joining us here. we do have the fed meeting tomorrow. that's what everybody is going to be watching. we'll probably have a quiet morning until the immediate. >> forward guidance will likely be altered somewhat. they will stick to a $10 billion taper, that's the betting so far. look for them to make some comments on the improved economy. capacity utilization better than expected, production better than expected. today a nice revision in housing starts for january. the data is starting to heat up a little bit and it's not march. we're not getting march data. we're getting february data
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looking like it's heating up a little bit. >> gentlemen, thank you. appreciate it. bob, see you later. we're going out off the highs of the day but still a decent rally on the heels of yesterday's rally as well. stay tuned, the report that will set the tone for tomorrow as well, oracle's earnings coming up on the second hour of "the closing bell" with kelly he was and company. see you tomorrow, kelly. >> thank you, bill. welcome to "the closing bell." i'm kelly evans, and on this tuesday here is how we're finishing. another winning day on wall street. the dow jones industrial average after shedding in the range of 300 points last week adding another 91 today after a strong session yesterday as well. that puts it at 16,338. the nasdaq adding 52 points. the outperformer on the session at 4332. the s&p 500 up 13, 1,872 is the closing level there. again, 1,878 is pretty much the all-time high for this index. remarkably enough with everything going on in the world, we're only a few points shy of that level. now, we're also expecting
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earnings at any moment from oracle and when those hit, we'll bring them straight to you. with me today's "the closing bell" panel, kate kelly, kevin o'leary, author of "cold hard truth on men, women, and money." the profit's marcus lemonilemon carol roth, and guy adami. guy, do you want to talk oracle, markets more broadly? >> let's wait for oracle because it's traded great. let's talk about the markets in general. you're too young to know who ethel mermen is but everything is coming up roses. it's crazy. the market doesn't want to go down. i see the news. i think it's mixed at best. bob pisani just said the data has been good. i'd call it mixed. i don't think earnings have been fantastic, but the market wants to plow higher. you can't get in the way. i have been wrong for the last 60 s&p points. i thought the last sell-off would sort of move faster to the downside. it didn't. so it tells me the market -- it
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tells me we will continue to go higher. >> we saw the market slice down through on the s&p 500 that 1850 level but it has sprang back up, kate. what do you make of that and the move we've seen at the same time seen in commodities. is that a bullish sign fundamentally or will it be a problem down the road? >> real quick on the stock market, more or less the folks i talk to in hedge fund land for instance say they're constructive u.s. markets still. they like the conditions they're seeing with some limit ed qe involved. they like domestic cyclicals among other things, like the u.s. relative to europe for sure. in terms of commodities, interesting story with the drought in brazil and california as well as some ind yo sin kratic issues in the oat market. ags in general are only 15% or 16% of the composite. you have much more exposure to energy. that's why you see the overall
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commodities indices are only rallies a percentage or two this year. so so far the kind of macro effect has been limited. >> that's a good point. to rattle off some year-to-date numbers we're talking about, with the broader indexes unchanged -- stock markets, i mean, coffee is up 70%. hogs, 42%, cocoa 12%, sugar, wheat. marcus, are you worried about the u.s. consumer? >> i'm a little worried about the u.s. consumer. i look at transports and some manufacturing of course i'm wondering why they're driving so high. i think cash on the bl sheet is having a big impact for a lot of companies. we're not getting a lot of debt, sitting with a lot of cash, and earnings aren't bad. >> kevin, the business round table told us in their quarterly survey they're finally seeing better signs in capital expenditures, a little better with hiring and generally their outlook. >> there's another reason, too. there's no competition for
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equities. i'm a fixed income investor. show me a ten-year at under 3%. why would i ever buy that? when i see the commodities starting to have an inflationary tonality to them why isn't the fed looking at that and raising rates for me. i'm getting unhappy. >> carol, are you unhappy with rates? >> you're always unhappy. juneau i'm always a little contrarian but as we're talking about everything coming up roses and all the prices rising, i want to go back to mr. adami and i want to talk about the russell 2000. if you look at the small caps which we don't spend perhaps enough time talking about, those seem to be really getting a bit out of range, a really big spread here between what's going on with the russell and say the s&p. so i wanted to ask guy's opinion on if he's concerned about what he's seeing in the small caps? >> kel, i'm in your camp. you know i'm way in your camp, but at a certain point as i say all the time, price is truth. yeah, i think you have to look at the russell and you have to
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be somewhat concerned, but the momentum in the s&p is tremendous, and just to push back on the yields play, why would you ever buy bonds? if you had said to me, guy, the s&p is going to be within a whisper of an all-time high by march, where are ten-year yields going to bei, i would have said 3.5%. the bond market seems to be saying something that the equity market doesn't see. i think the bond market is going to wind up being right, but for now both seem to want to go higher. >> kate? >> if i can just return to this point for a second about commodities and their impact on the market. i think you're going to see a case by case involvement. jim cramer is going out to the starbucks annual meeting tomorrow. what do they have to say about the 70% spike in coffee prices? granted, coffee prices were at a real low at the end of last year and they have some room to run with, but an effect like that on sort of a raw input are going to have a huge effect on consumer companies that are so dependent
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on one or two materials. >> especially if you have to take a hit to profits. goldman talking about whether we've reached peak profit margins or not. they think we have a couple more quarters to go. what's interesting, kevin, is despite the fact we've seen this run-up, the global inflation indexes is running at an annualized 1.6% because emerging market growth continues to fall short of what it needs to be. the u.s., the cpi figure this is more than were still pretty soft despite some of the choppiness here and there. so i guess if you want to talk about higher rates, do you have to see both higher general inflation and higher wages. >> you're trying to tie our u.s. domestic economy to the rest of the world, and maybe it's different this time. but i look at the u.s. markets and i talk to small business every day. things are looking better. there's no question about it. but i want to go back to what guy said. if he really thinks the ten-year rate is going down, that is incredibly bad for equities because he's right, bond guys are way smarter than equities
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guys. >> you'd know that if you read "liars poker." >> i'm a bond guy and that's the way i look at the world. right now i'm looking at this saying to myself somebody is wrong, and if this bond doesn't go past -- the ten-year has to have more than a three handle on it. >> inflation, the one thing we all need to be thinking about especially with the fed meeting going on right now is at some point is the fed going to be caught flat-footed here? at some point is inflation going to get away and they're going to have to make a big move here? i personally think that's going to hahn and that can have a big effect on the market. >> the thing i worry about is summer and late fall earnings from some of the retailers. you're talking about all these commodities driving up. it's going to -- the finished goods products will land on shelves and the retailers will not be able to raise 3r50is prices. >> we have oracle out with earnings. josh joins us with the numbers. josh? >> kelly, oracle just reporting. let's get you the numbers. remember, the street was looking for 70 cents on $9.4 billion.
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oracle reports 68 cents on $9.3 billion. so a miss there on the bottom and the top. looking through the divisions, new software licenses, so new money oracle is bringing in, that was up 4% to $2.4 billion, but that does miss what the street was looking for. software updates and support up about 5% to $4.6 billion. that's in line. hardware products up 8% to $725 million. that's above what the street was looking for, but oracle reporting 68 cents on $9.3 billion. a miss on the bottom and the top. delly, back to you. >> thanks very much. >> i worry about oracle missing top line. cap ex got pulled back in the last 90 days. people started to get a little nervous. i think we may see some pent up demand in the following quarter. >> let's bring in david garrity. what jumps out to you. >> i think what we have to consider is there's been a lot of competition coming up for established it. vendors such as
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oracle from some of the emerging companies that have been benefitting from a strong stock market and a lot of entry capital available. companies like amongo db that costs 10% as much as oracles and you have been finding as companies have been starting to look towards big data as a means of running their business, obviously they're starting to look at vendors who are more oriented towards this new paradigm rather than companies like an oracle or an s.a.p. or ibm that are the one that is brought out the first iteration ev of database software. i think oracle will be challenged going forward from here. >> david, what's your view on the shares right now? >> currently the stock trading down about 6%, the price to earnings growth relative to where you're looking at is about 1.3, 1.4 times, not necessarily extended versus the overall market, but i would say if you're looking for growth, oracle might be a little challenged unless they step up to the plate and make an
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acquisition which they've not been shy about doing in the past. >> did i hear -- what did you say the multiple was, the price to earnings ratio? >> price to earnings growth is approximately about 1.35 times -- >> earnings growth, i'm sorry. >> 12 1/2 times forward earnings. >> guy, do you want to jump in here for what this means with this old -- i hate to call it old tech space. >> it guess back to what carol's question to me was. what does it mean for the large cap names and what does it mean for the russell? some of these smaller cap names are taking over. clearly, when you see a report like this out of oracle. oracle has had a huge run, probably going to be a couple days of this sell-off. what does it mean for the broader market? the market has shrugged off everything. then i look at ibm which i think has gotten way ahead of itself on the long side. i think maybe ibm is in for a similar quarter to oracle. maybe ibm is a sale here as well. but, again, if the broader market shrugs it off, it's just one more way to look at it that the market doesn't care.
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>> if this company, if their business is being disrupted by new players, by the innovation in the space, why should we take that as a cautionary sign? >> i don't know. i'm not saying you should. that's going to be what we should look for tomorrow though. >> well, i guess because what we're going to start to see, kate, is a lot of people saying the market is shrugging off. oracle comes out with a big miss, et cetera. how much read through should there really be? >> it's hard to say. when you read these days about what people are looking to from professional investors, it's all about sort of fundamental research and the old-fashioned stock pick something back. so you would think you would see a stronger reaction to news like this. i also notice if you look at hedge fund trends, you saw a peak in total assets under management last year, yet the largest number of closures of individual hedge funds since 2009. there's an emphasis on quality and sound strategy. it doesn't explain why the market isn't reacting more strongly today. >> this might be a case of having to listen to what the company itself says if it's talking about macro weakness,
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pricing pressures, et cetera, as opposed to kind of things specific to the execution of their business plan. >> yeah, they can come back and say that geographically things were weak for them over in europe, but i would say from a bigger picture standpoint, you are seeing a rotation, new tech versus old tech. obviously you can look at some names like a facebook paying up $19 billion to buy whatsapp and the stock is up. from that standpoint investors are looking for companies that are making bold moves and for companies that are basically setting themselves up around new paradigms in terms of computing. >> yep. we'll leave it there for the time being. david, thanks for your time. guy, really appreciate it as well. thanks to josh lipton for breaking the numbers. the panel sticks around with me and be sure to stick around and catch guy and the rest of the "fast money" crew coming up at 5:00 p.m. now, taking charge, that's what gm chief mary barra is attempting to do in the wake of the recall mess of the company she now heads. she's issued an apology, installed a new safety czar and wi we'll look at her moves next. and i'll talk with joel
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welcome back. general motors ceo mary barra speaking out about the recent recalls plaguing the automaker. she's announcing the creation of a new post to deal with safety issues. phil lebeau joins us with the details. >> this is really the beginning of gm trying to get in front of this story because they've been beaten up so much over the last couple weeks. today mary barra held a rount table with some print reporters answering questions about the recall crisis for the first time since this all blew up a month ago. she avoided talking about specifics in terms of what went wrong over the last ten years identifying the ignition switches and what went wrong there. she says they will not sacrifice accuracy in their own investigation for the sake of speed, and she says that investigation may take up to a couple of months. she said, i ask for your patience. i know you want to know what happens. so do i. so does mark. she's talking about mark royce, the head of global product development. this is the subject of our internal investigation as well
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as some inquiries. there may be time that i am limited in what i say, but i do commit to you that as we have results along the way, we will share what is appropriate and more importantly we will take action. she says that if she is asked to testify on capitol hill because there are a couple of congressional hearings that are going to be coming up in the next month, she will testify. so far she has not turned over any documents to the department of justice, hasn't been asked to turn over any documents. she says that she's sorry for the loss of life and that it was one of the first points she made. that's the first time we've heard that, kelly, as general motors and mary barra are trying to take those steps at least a little bit to say to the public, we understand the severity of the situation and we grasp how serious this is and what needs to be changed here at general motors. >> and, phil, stay right there, if you will. i want to ask the panel about this. marc marcus, to you in particular, you go in and fix businesses, not necessarily that gm is a flawed business here again, but obviously there are issue that is led to this crisis, some of
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them predating the new gm. is mary barra now doing the new thing. >> she is and that's why i like her as a female ceo. she's taking responsibility, acknowledging the mistake. she's saying clearly, this will get resolved, heads are going to roll, i'm in charge, it's going to get fixed. >> as a female ceo or as a ceo in general? >> we had a discussion last week about whether a man or a woman would handle this differently and i think in this particular case the fact that she's showing compassion, she's being a great listener, i'm not sure a lot of men could do the same to be honest. >> you raise an interesting point. i was listening to phil's report and also his earlier reports and wondering what kind of grade would company watchers give barra for communication? i think it's interesting -- >> she gets a pass for sure. >> no ceo wants to inherent this. >> here is the question. in the incremental buyer, are they going to buy a gm car? are you going to say i'm going to wait until she figures it out, i'm going to buy something
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else? >> i don't think it impacts current sales primarily because when you compare this with toyota, toyota impacted vehicles that were on the lot and it made people say, hmm, should i buy this? we're talking about a recall situation for vehicles that were built between '03 and '07. not to diminish the seriousness of that situation. it simply says the people out there looking at a gm vehicle right now are not thinking about this recall in terms of is it in the current vehicles. >> at the same time doesn't it raise the question of what else might they have overlooked from 2007 on? >> absolutely. absolutely, kate. but if you go back and look at the history of recalls in the auto industry, almost every time there's been a terrible one, you have bun dits out there saying that's it, these guys are dead in the water. you look at the pinto, look at the explorer, toyota, every time auto sales tend -- >> it's also -- it's an umbrella brand. you're talking about gm. people don't buy gm. they buy cadillac or buying a certain subbrand, and so the
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average sun koconsumer may not even though it's at the parent level, they may not e quit the issue with the brand they're buying. >> this is why having a dealer body that can represent a brand in a community and be very strong with the consumer and instill confidence -- >> you had to sneak that in there. >> this is why having a dealer body is important. they're communicating on behalf of the manufacturer and their -- >> but tesla -- >> it raises the old scepter that in north america, not just gm, we built crappy cars, and does this bring us back into that concern because that's when the germans and everybody else got market share here. >> exactly. >> they can point at this and say, look, here is evidence that along the way we've gone back to our old ways of building crappy cars. >> and another thing -- >> let me put it this way, there are more people who will be read being it and it's gotten picked u
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up, and just as maybe people were starting to trust new car companies, in the back of their mind do they think maybe it's just the old thing in new clothing? >> there's no doubt. that is an easy theme for anybody to pick up on the web. i get e-mails all the time from people, both pro and anti-gm and the anti- ones, they're all the same. they're terrible. they build hunks of steel that drive down the street and fall apart. on the other hand, i also hear from people who say they will buy them. >> but speaking of this damaging narrative, fim and everybody else, too, not only is it something that contributes to the perception that's negative about u.s. manufacturers, but this is what happened before the government bailed out the big three automakers. >> it speaks to a bigger issue here about accountability, and i heard mary barra say she's going to take action. narrowing it down to the people who knew and action against them and getting them out of their jobs and i think if she does
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that, that will give me and i think a lot of investors a lot of respect towards her. maybe she's done a great -- >> carol, you're assuming there's still somebody who is at the company who was there in 2014 and that they put their name on a document. if we're looking for a smoking gun document, you're not going to find it. i think this is more a case of generally speaking middle management incompetence, people let thing go. were not as diligent as they should have been. >> no market share loss in the next two quarters. is that what you're saying? >> i wouldn't talk about that because -- i wouldn't predict that and here is why. you're dealing with the pickup truck market and the problems that they've had getting their current full-size pickups to be as readily acceptable or as accepted in the market as they were in the past. that's a wildcard in there. there's no way of knowing for sure. >> would you say generally no share loss, phil, over the next couple years? is that -- >> my guess is that if you look back at general motors in two years, they're generally going
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to be about where they are now. 17.8% is the market share. i wouldn't be surprised if they're around 17.8% or 17.9% two years from now. >> kevin, are you taking the under? >> i don't think i'd short the stock yet, but this is -- if this happens again in the next few quarters, this will not be good. >> what about tesla? >> toyota survived it. >> they did and, carol, tesla, that's a whole other segment. phil, thanks very much. >> you bet. >> appreciate it. up next, how to be a stock market genius. joel greenblatt, author of a book with that very same title, tems us where he thinks markets are headed and whether you should go along with them. and the reaction to vladimir putin's comments indicating they believe him when he says he'll stop by taking crimea. what do you think? tweet us your thoughts @cnbcclosingbell is the way to reach us. your best ones later on the program. we'll be right back. 'll be righ. (announcer) scottrade knows our clients trade and invest their own way. with scottrade's smart text, i can quickly
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where if you get into an accident and use one of our certified repair shops, your repairs are guaranteed for life. so call... to talk with an insurance expert about everything that comes standard with our base auto policy. and if you switch, you could save up to $423. liberty mutual insurance. responsibility. what's your policy? welcome back. let's get back out to cnbc headquarters and get a check on some of today's big movers. >> let's get you up to speed. a few big names to focus on. oracle shares are taking a hit after an earnings miss. earnings and sales both came in worse than analysts expected. new software sales and internet based subscriptions rose by 4% this past quarter over the same time last year. that growth rate was on the lower end of oracle's previously given forecast. let's move on to jor tech company, adobe systems which
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prematurely released their earnings. profits and sales beat analysts' estimates. those results were aided by stroer stronger demand for their -- 405,000 more subscriptions. solar city, the shares are all over the map on heavier than expected volume. this as the company posts a fourth quarter loss that was smaller than wall street was expecting but current quarter forecasts are for a bigger than expected loss than wall street was looking for. so those shares again moving all over the map positive to negative. big action. back over to you guys. >> thanks very much. so where should investors be looking for value in in market. joining me to help answer that question, one of the most distinguished value investors out there, joel greenblatt of gotham funds and author of the book, "you can be a stock market
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genius." >> thank you. >> do you take oracle as a tell for the sector more broadly or as somebody being disrupted? >> we look in general at individual stocks and we're valuing them individually. so what we found is that most of our extra returns really come from individual stock picking, not from sector picking. in fact, we get no benefit from where we con scentrate on a particular sector. >> in the tech sector then, what of the names you like? >> well, we like the cheapest things that are coming up now are hewlett-packard, for instance, and apple. you know, they're trading at low measures of free cash flow. there are huge returns on capital businesses. most people don't like them because they're old and stodgy. i have been teaching at columbia for the last 17 years. i ask them what do you do with a company that the technology is always changing? i usually tell them to skip that
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one and tell them to find one they can figure out. when you buy them as a group with metrics that are so cheap as a basket, we don't just buy apple. we buy a bucket of apples. and our bucket right now is very cheap for technology companies like that. >> so for people out there trying to figure out they look at this market, it's kind of flat year-to-date and they say how do i pick the winners? what do you tell them? how can they be a stock market genius as well? >> well, you know, it comes down to valuing businesses and buying them at a discount. most people can't do that. so they should probably stay out of the way. what i can say big, big picture is this. large caps have a much better valuation right now than small caps. they're not great, but they're not terrible. we've looked back at the last few decades, and if you look at the russell 1000, which is the thousand largest companies in the u.s. which mirrors the s&p very closely, we're in the 42nd
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percentile towards expensive. it's been cheaper 58% of the time. 42% of the time it's been cheaper. the year forward returns for that index have been somewhere between 7% and 12% in that area, and the difference is, and i heard you speak being it before, the russell 2000. it's stock number 1001 through 3,000. that tells a different story. it's been cheaper 95% of the time over the last several decades and when it's been this expensive in the past, the year forward returns are negative, negative around 3% or so. so not great. >> no. so i imagine you're steering clear of the russell then and of specific names as well snp what do you think about a sector like biotech? >> most biotechs have had an incredible run, so i don't have -- i can't opine on the sector. i would say there are many biotechs that are very expensive. people are very hopeful. many of them don't have anything in earnings so it's very hard to
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value them. you're valuing them on hope of their new products and when people are hopeful, they will bid those things up. there was a huge run last year a huge run in january. so we're finding a lot of things to short in the biotech sector. hasn't been particularly great for us to find some of those, but now you have an extreme small cap environment and you have an extreme biotech environment, so i think going forward good opportunities on the short side there. >> if you then were to say to people the value is mostly in the larger cap stocks, it looks like retail in particular there are a couple names there you guys like, correct me if i'm wrong, coach. any others? >> well, what's coming up cheap now are stocks like kohl's and, you know, not super high end companies. i think people are still worried about the midlevel consumer, and in general just worried about the economy. so, you know, particularly the
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consumer. so those coming up cheap right now. pretty much everything we buy, people don't like for some reason. that's why we're getting it cheap. it's just that what tends to happen is that people are short-term oriented, and whether is professional manager has a long-term horizon or not, it's pretty clear their clients don't. some of the stocks the next year or two don't look as good as the recent past so that's not the happy hunting ground for making money in the next year or two. we take advantage of that in general. >> if you had to leave our viewers with some topics to hold onto for that medium term, what else looks attractive? >> like i said, the super large caps, you know, are relatively cheap. so the microsofts of the world, hewlett and apple and, you know, pretty much the top 20 names in
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the s&p 500 are a little over 30% of the index. it's weighted so heavily towards those, and most of those names are reasonably priced. even google. >> you can still make money in this market? >> yeah. like i said, it's still above average as far as expensive but they're still positive returns available. you don't have to -- the average has been 8% to 10%. >> joel, thank you so much for being here. joel greenblatt of gotham funds. another new twist in the missing malaysian airliner and the twist that pointing again at the pilots. do you know how much airlines monitor their pilots in the years after they hire them? we didn't but we did get the answers, and we'll tell you when we come right back. come right . no two people have the same financial goals.
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welcome back. new information on the missing plane intensifying the focus on the pilot. ker simmons joins us with the latest. >> the mystery deepens every day here. authorities here now saying that they believe there was no one else on board flight 370 who could have flown 777 and that some of the maneuvers it made as it disappeared would have been preprogrammed onto the computer.
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inexplicable to people, much of this, as investigators study the pilots' flight simulator confiscated from his house to see what that may reveal about what he might have been doing request that. at the same time, friends and family of both the pilot and the co-pilot defending both men. so we stim don't know after all of this time simple questions. who was flying the plane? where was it being flown to? where is it now? and why was it flown in the way that it was? back to you. >> keir simmons the latest. this story reminds us of the enormous power the pilots have once they enter the cockpits. everyone's lives completely in their hands. after an airlines hires a person, what kind of procedures are in place to monitor their mental status throughout the ensuing years in joining us for more, greg feith, former ntsb investigator. greg, it's good to see you again as we follow this saga and as the focus shifts to the pilots. what do we need to know about
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the controls in place here? >> kelly, when an airline hires a pilot, especially here in the united states, they do the background checks, they do some psychological profiling of that pilot to make sure that they are pilot material for that particular airline. every year the pilot will go back for recurrent training. they also must meet a medical standard yearly in order to perform the duties as a commercial airline pilot and exercise the privileges of their certificates. there is no specific psychological monitoring or profiling every year after their initial hire. >> and, greg, are those standards in the u.s. generally toughest? what about the international standards for countries like malaysia as well? >> a lot of the standards are dictated by the airline, especially with the hiring standards and the criteria by which they hire a pilot. a pilot that's hired here may not get hired overseas and vice versa just because the standards are different, hourly requirements are different, experience, and that kind of
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thing. >> just curious thinking through this, i'd love to know what the panel thinks, kevin, if you think about the requirements we have for people to get licensed as a pilot, should there now be more scrutiny on their physical and mental condition throughout all of those years they are a pilot? >> i don't think so because 99.999% of the time, and i think of this when i get on a plane every day. works out. i land after having my drink and i feel pretty good. i want to ask greg a question i think is going to be raised and i like millions of others are fascinated with this story. at what point do we stop looking for this plane? because it must be a huge cost to countries and private companies that are looking for it. in a month, in two months, in three months, is there a point at which we just stop? >> kevin, absolutely. you have to start looking at it on the return on investment. when i did value jet, we were down there pulling records for four to five months. there comes a point where you have to really evaluate the assets that you have expended, the monetary assets that you've
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expended, and determine what your return on investment is to see if it's going to proffer any additional information that you don't already have. and the malaysians will have a tough call here shortly. the united states has scaled back their operation. they're down to two aircraft -- >> although they argue they're not necessarily scaling back the scope of their involvement. >> no, they're going to stay involved. they're just going to move their sea assets out of there. >> right. >> quick question on one of the new opera at this theories which is there was some sort of fire on board and the pilots intentionally shut off the transponders in order to contain a potential fire and eventually smoke or fire rendered them unable to operate the 345eplane it crashed. would that explain why the plane may be lost somewhere in the indian ocean? >> there's been this theory, especially about wire fires. new generation airplanes have certified wire that will not burn. it's basically
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self-extinguishing. if there was a wire fire of any kind, and typically wire fires are slow burning, so, yes, they will create some smoke, but you'd have to take out a lot of the wires in that airplane to be able to knock out all the communications. pilots would be able to get a mayday call off even if they had smoke developing in the cockpit, they would at least declare mayday, we have smoke in the cockpit and try to tell them what their intentions are. you'd have to have a big fire to take out all of the wiring that would affect those communication radios. >> we have to go. marcus, you looked upset a second ago. >> i don't want to hear about return on investment when you're looking for my family. >> of course. >> malaysian needs to look until they find something. at some point it becomes cost prohibitive. it's been a couple weeks, not a couple months. >> that's where the issue of looking in the wrong body of water because we didn't get proper information out of malaysia was particularly undersetting. what a waste of time and resources but also people's feelings. >> something to keep in mind
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when we talk about the cost of these radar systems is the cost of these search and rescue efforts. got to leave it there. as mentioned, it's probably not the last we'll see of you as we follow all of this. thanks very much. we're getting details in the meantime on why adobe released its earnings so early. jon fortt joins us. >> it looks like a mistake. i have gotten this statement from adobe. we've determined an internal error caused the investor relations data sheet to be accessible from our website prior to scheduled publication. just got that statement. i'll note the revenue and earnings both came in above expectations as did creative cloud subscriptions. numbers spiked when the numbers leaks. but it's trading down a little after hours. >> thanks very much. straight ahead, the golden years for americans may be tarnished. a new study from the employee benefits research institute gauging how confident americans are about retiring and it's not looking good. also today russia's vladimir
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putin says he has no other design on the rest of ukraine and the stock market seems to believe him. what do you think? your thoughts coming up. s comin, i've learned that when you ask someone in texas if they want "big" savings on car insurance, it's a bit like asking if they want a big hat... ...'scuse me... ...or a big steak... ...or big hair... a new study from the employee your thoughts coming up. houghts. geico. fifteen minutes could save you fifteen percent or more on car insurance.
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welcome back. russia and the markets, retirement, disney, did any of these stories make the hot list. let's check in with alan wastler. >> you bet they did. first of all, right out of the gate, the news that microsoft is
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finally going to make office available on ipad according to a reuters report, that's been on fire all day long. people have even been more interested in the pop microsoft stock got right from that news. so we've got a sum up of all the stock action on it today. that's been our number one for the last hour. number two, barclay's initiated coverage of the domestic luxury sector. so we titled it up as basically kate spade is in, michael kors is out because they put all their stock picks right out there. people have eaten that up on the site. and finally, sharon epperson's retirement piece looking at the latest numbers out, it's sort of a good news/bad news thing. the good news is, hey, wow, people are feeling more confident, at least some of them. 18%. up from 13%. unfortunately, that's still a pretty low percentage right there. >> exactly. >> you know, not great, but anyway, retirement stories always do well on the website. that's what's burning it up right now. >> it's such be a important issue. we're going to talk about it with sharon epperson just ahead. thanks very much for now.
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>> take care. >> see you tomorrow. the clock is ticking, the retirement clock. the reality of that clock is counting down on 9/everyone in this country. up next, sharon epperson will join us. she has the latest report on the state of retirement. it's news you need to know even if it's not very good news. we'll be right back. what if a small companyigh. became big business overnight? ♪ like, really big... then expanded? ♪ or their new product tanked? ♪ or not? what if they embrace new technology instead? ♪ imagine a company's future with the future of trading. company profile. a research tool on thinkorswim. from td ameritrade. a research tool on thinkorswim. sometimes they just drop in. always obvious. cme group can help you navigate risks and capture opportunities.
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welcome back. the employee benefits research institute living up institute, living up to its name. it's put together the most comprehensive study on retirement. sharon epperson broke some of the study down for us. >> most americans aren't close to being financially prepared to retire. more than one-third of americans have less than $1,000 in savings and investments, according to this new survey. 60% have saved less than $25,000. and they're not taking action. fewer than half have done a come collation to find out how much they should be saving. at the same time, workers overall, confidence in their ability to retire comfortably, has increased for the first time in seven years. 18% say they're very confident, from 1% last year. but that increase in confidence is almost exclusively with those with higher incomes and
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participating in retirement plans. one-third of workers with incomes of $75,000 or more, will have enough to retire comfortably. and they're twice as likely as those who don't to be very confident. but financial advisers say it's a false sense of confidence, tied to the stock market gains, not to improved savings habits. a second survey finds most americans spend more time buying a flat-screen tv or choosing a restaurant for dinner than they do on planning investment in an i.r.a. that's an investment many will need to rely on for decades. kelly? >> sharon, stay with us. such an important topic. carol? >> i wanted to ask sharon a question about how much these people should be saving. because there's one thing to be confident and there's another thing to be in reality. i've heard anywhere from 25-times to 40-times your yearly anticipated annual spending. is that a correct range? >> you would be really well-set if you had that much saved. there's others who say depending
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on your age, if you're in your mid-40s or so, you should have three-times your salary. and by the time you retire at 65, 67, you want to have at least eight-times your salary saved. so, those are some smaller rules of thumb. they're a little less than what you were mentioning. but for many people, they say even that is just unattainable for them at this point. >> i was talking about your annual anticipated spend, not your salary. >> okay. yeah. >> statistics like this make you want to ask, should we not be forcing people to take a portion of their posttax income and force it into savings? look -- >> you sound like senator warren. >> if these stats are true, everybody's going to end up paying for these people. >> exactly. >> we don't want people on streets of america not being able to buy food. if you have $1,000 in the bank and you're 65 years old, that's exactly what's going to happen. >> i raise this. this goes back to a suggestion we raised in january. you can have the private sector
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do this. there's a ton of cash and earnings and profits. why not incentivize companies or get them to put them into profit-sharing or savings accounts more aggressively? >> one of the things that the obama administration has tried to do with my r.a. is encourage people who don't have a retirement plan set up, don't have access to a retirement plan at work or have not accessed the retirement plan at work, to at least start saving. and the other thing, now that it's tax season, that a lot of folks who are lower income workers don't realize is that there's a saver's credit they can qualify for. there's a tax incentive there for so many americans that could use it don't take advantage of. >> i thought the plan was an interesting one. you would think that a lot of people out there see, i can only put $20, $50 in a retirement account. what's the point? or i don't work for a large company. it's a nice potential solution. >> that's idea is falling off a cliff already. >> already? >> we have the structure.
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i'm in the mutual fund industry. let me manage the money. send it to me. >> kevin, is it not better to get people investing in stock, investing in corporate america? >> i'm saying corporately, when you sign up for a job, it becomes law that 10% of your paycheck goes into an account that forces you to save it. >> that seems like -- >> it's your money. >> kevin as finance minister just resigned. >> i just saw that. >> many of the people who should get advice, who should work with professional managers, even when they do that, they don't listen to what they're told to do. >> exactly my point. >> i think social security was supposed to be like that. >> that's the government managing the money. >> you want to force people to save. >> i want the private sector to manage your money. coming up next, your tweets. vladimir putin said he had no other designs on ukraine, after annexing crimea today. markets took him at his word. should they? your response when we come right back. searching for trade ideas that spark your curiosity tdd# 1-888-628-2419 can take you in many directions. tdd# 1-888-628-2419 you read this. watch that.
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jeff tweets, i trust him to appear in public with his shirt off and ride more bears, too. thanks to everyone on the panel. what do you think when it comes to laying out the rest of the week? we have janet yellen, appearing tomorrow. that's going to be a huge market mover. we're going to learn about the health of u.s. banks. maybe some of the capital there returning on thursday. is it still going to be a geopolitics-related week? >> i think waiting for indications from putin as to his plans, that will be something to watch. i'm looking to see closure on jpmorgan's sale of its commodities unit. we're told that will happen any day. and it looks that the buyer is a swiss trading company. as banks get out of noncore assets. >> this is the meeting that everybody has been waiting for. we've been talking about the march fed meeting. i think what comes out tomorrow, that's going to set the tone for the rest of the week. >> i'm looking to see what happens with apple this week, with microsoft announcing the possibility of putting office on to their tablets and other
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devices. what's going to happen? is this the punch they needed? >> those shares up nicely today. >> i'm looking at the focus on the banks. asking myself, will there be a time when we leave these guys alone? the taxing the sector itself, is shear insanity. ridiculous. >> as we mentioned, that finance minister position in canada, coming available. the idea -- >> someone i know put together a study showing that when gdp in the u.s. goes above 2.5%, people care much less about the headline damage at banks. maybe we're headed in the right direction. >> i think we've gone way too far in punishing them. >> it's been great to see you this hour. you can tune in and see much more. kevin o'leary, coming up on tonight's "shark tank" minimarathon at 8:00 p.m. eastern. and right after that, a brand-new episode of "the profit," with my two panelists here today. "fast money" coming up in
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seconds. melissa lee, what's on tap? >> i got three words for you. kareem abdul-jabbar. >> is he on the show? >> yes. he's going to be our guest. he thinks that college athletes should be paid. he also has a new business he's starting up with we'll hear all of the details about it. concerns sports memorabilia that has evidence of the players actually owned it. dna evidence. >> i love it. i want his bracket picks, too, melissa. >> we'll try, kelly. >> over to you guys. "fast money" starts right now. live from the market site in new york city's times square. weaker than expected earnings report. that conference call starting right now. we'll get the details throughout the hour. but the rest of old tech breaking out. microsoft, hitting its highest level since july of 2000, on reports it will unveil microsoft office for the ipad. cisco is hhe


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